5.1.5 Tax laws
In Austria, only an estimated 1.94% of the overall cultural funding is supplied by the private sector despite the existence of a "Sponsors' Ordinance" regulation adopted by the Federal Ministry of Finance in 1987. Under this regulation, an enterprise / entrepreneur is granted a tax break on expenses for sponsoring cultural events. The ordinance lists various criteria that must be fulfilled in order to qualify for the tax break (sponsoring must, for example, be in the form of an advertisement). This regulation only allows for a very small amount of expenditure to be tax deductible; however, plans for the introduction of new legislation, which has long been discussed, have been announced.
On the basis of an amendment to the Federal Arts Promotion Act (1988) in 1997, certain public subsidies are tax free, retrospectively to 1991. These include: grants, prizes and supplements from the Austrian Film Institute for promoting the creation of film concepts and screenplays; income and assistance from public funds or from the funds of public or private foundations, as far as compensation for expenditure or expenses is concerned, or – with the exception of private foundations – for activities abroad.
Income up to EUR 11 000 is tax free. Income from EUR 11 000 to EUR 25 000 is taxed at 36.50% and income over EUR 25 000 and up to EUR 60 000 is subject to 43.21% tax. Income above this is as before subject to a top rate of 50% tax. Owing to the progressive income tax tariff, it is most favourable if one earns roughly the same amount each year. For creative workers, however, it is normal for incomes to fluctuate greatly. For this reason, since 2000 they have been able to spread artistic income over three years: one third of the surplus of the current year is assigned to the current year and each of the two previous years.
Since 2000, creative artists from abroad have been able to apply for the partial or full cancellation of tax liabilities in Austria that are in excess of tax liabilities in their country of origin if their establishment of residence serves to advance art in Austria and if there is public interest in their work.
Since 2002 donations made to museums (to important country-wide private museums, as well as to federal museums) are tax deductible.
There are two tax rates under the Austrian VAT Law (1994), one at 20% and a reduced rate at 10%. The reduced rate applies to turnover related to artistic activities, cinema, theatre and concert tickets, museums, botanical gardens or nature parks, as well as services by the Austrian Broadcasting Corporation (ORF) and cable TV companies, books magazines and dailies. There is 20% VAT on music CDs.